Montel Magazine 4 2021 - Nordic power spat - Page 22

Russia tightens energy squeeze on Ukraine

Russia is putting an energy squeeze on Ukraine , observers say , and the ongoing conflict between the two nations since 2014 continues to underpin coal and gas prices in Europe .
By Laurence Walker
Moscow has unofficially halted exports of thermal coal to Ukraine , leaving the country ’ s energy firms scrambling for alternative origin material . The unofficial suspension of coal exports – including transit shipments from Kazakhstan – began on 1 November , according to sources close to the situation .
“ I am chasing all avenues to [ replace lost volumes ], including from Poland ,” says a Kiev-based coal trader , noting Ukraine may require anything from “ a few hundred thousand tonnes ” to “ close to a million tonnes ”, depending on the severity of the winter . According to official data obtained by Montel , Russian coal exporters applied to their government for permission to export 0.8m tonnes of thermal coal to Ukraine this month , although – at the time of writing – the application was still under consideration .
In November , they were permitted to export 0.64m tonnes , but preliminary rail figures showed no thermal coal was sent at all , only coking coal . The trader says domestic Ukrainian mines are meanwhile unable to sufficiently ramp up production to meet demand , with some mining capacity still in the hands of Russian separatists , in the eastern Donetsk region , where production can be transported to Russia , blended with the country ’ s own coal , then exported via southern seaports as Russia-origin material .
As such , Poland has proven a favourable alternative source of supply , with the standard Soviet-gauge rail network allowing for ease of import . “ There is a good advantage . You can load Polish coal into Ukrainian rail cars and ship it from the Polish mining area to any destination in Ukraine ,” the trader says , adding however available supply is tight . “ There is not an abundance of availability in Poland , but some spot tonnages are still available .” He points also to Ukrainian concerns that Poland could close its eastern borders for cargo traffic at any time , amid efforts to stem the arrival of refugees .
A Polish coal trader also says there is only limited supply available for export . “ Poland consumes 95 % of its coal [ production ] nowadays domestically , so coal for export is marginal ,” he says . At the same time , coal stocks at Ukrainian plants were seen in early December at around 0.4m tonnes , well below the “ required ” 0.92m tonnes , says Yuriy Onyshkiv , Kyiv-based senior analyst with Refinitiv . “ This is partly due to a recent halt of imports from Russia and Kazakhstan as well as the failure of private and state-run power plants to secure the needed supplies ahead ,” he says , noting Ukraine had turned to seaborne imports to offset this issue .
A coal trader with a Swiss trading house says Ukrainian firms have been “ taking all non-Russian spot cargoes ”, and by late November had
24 Montel Magazine 4 – 2021